It’s not often the FTSE 100 is lifted by positive UK economic data due to its weighting to overseas companies. However, Friday was one such session after UK GDP growth since the beginning of the pandemic was revised higher.
The ONS said the UK economy has grown 1.8% since the beginning of the pandemic, a sharp revision higher from than previously estimated 0.2% contraction.
The upbeat data helped propel the FTSE 100 0.6% higher with UK-facing stocks in the driving seat.
“While the UK economy bounced back from the pandemic at a faster rate than previously expected, it is important to remember these figures are backwards looking. The market is more interested about what might happen next,” said Russ Mould, investment director at AJ Bell.
“The economy is expected to be sluggish going into 2024, particularly if inflation remains sticky and interest rates stay higher for longer. However, markets have been worried about a recession so positive revisions to GDP estimates, even small ones, give hope that we could avoid the economy going into a big downturn.
“This shift in sentiment provided support to UK stocks, with retailers, engineers and housebuilders among the sectors in demand. The key question is how long this positive momentum can last.”
The momentum Mould alludes to certainly progressed into the afternoon session on Friday with JD Sports, Ocado, Barratt Developments among the top risers.
JD Sports was also helped higher by solid results from Nike overnight.
Severn Trent was the FTSE 100’s top gainer after announcing a massive £1 billion placing to help fund their ‘transformational’ business plan. Severn Trent plans to invest £12.9 billion over five years to bolster their infrastructure.
“By 2030 we will have transformed our network to provide our customers with the very best service. At the heart of this ambition is a commitment to a sustainable future – from healthier rivers, to providing thousands of jobs, fewer leaks and a water supply ready for the impacts of climate change and population growth,” said Chief Executive Liv Garfield.